SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

Form 10-QSB

|x | Quarterly   Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | -----------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2004

|o | Transition   Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------------------

For the transition period from _______________ to ________________

Commission file number 1-14827

EVCI Career Colleges Holding Corp.*(Exact name of small business as specified in its charter)

|Delaware                                                         |  | 06-1488212                            
|---------------------------------------------------------------- |  | --------------------------------------
|(State of other jurisdiction of   incorporation or organization) |  | (IRS Employer Identification   Number)

1 Van Der Donck Street, 2nd Floor, Yonkers, New York 10701(Address of principal executive offices)

(914) 623-0700(Issuers telephone number, including area code)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
xYes
oNo

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 12,208,646 shares of Common Stock as of August 9, 2004.

Transitional Small Business Issuer Disclosure Format:
oYes
xNo

*Name changed August 12, 2004 from EVCI Career Colleges Incorporated.



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Table of Contents

|                                                                                                                                               |                                                                                         | Page
|---------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- | ----
|                                                                                                                                               |                                                                                        
|                                                                                                                                               |                                                                                         |     
|Part I                                                                                                                                        
|                                                                                                                                              
|Financial Information                                                                                                                         
|                                                                                                                                               |                                                                                         |     
|Item 1.                                                                                                                                        | Financial Statements                                                                    |     
|                                                                                                                                               |                                                                                         |     
|Consolidated Balance Sheets as of June 30, 2004 (unaudited) and   December 31, 2003 (audited)                                                  | 1                                                                                      
|                                                                                                                                               |                                                                                        
|Consolidated Statement of Operations for the three month and six   month periods ended June 30, 2004 (unaudited) and June 30, 2003 (unaudited) | 2                                                                                      
|                                                                                                                                               |                                                                                        
|Consolidated Statement of Cash Flows for the six month periods ended   June 30, 2004 (unaudited) and June 30, 2003 (unaudited)                 | 3                                                                                      
|                                                                                                                                               |                                                                                        
|Notes to Consolidated Financial Statements                                                                                                     | 4                                                                                      
|                                                                                                                                               |                                                                                        
|Item 2.                                                                                                                                        | Managements   Discussion and Analysis of Financial Condition and Results of Operations |     
|                                                                                                                                               |                                                                                         |     
|Overview                                                                                                                                       | 8                                                                                      
|                                                                                                                                               |                                                                                        
|Comparison of the three months ended June 30, 2004 and June 30, 2003                                                                           | 11                                                                                     
|                                                                                                                                               |                                                                                        
|Comparison of the six months ended June 30, 2004 and June 30, 2003                                                                             | 14                                                                                     
|                                                                                                                                               |                                                                                        
|Liquidity and capital resources                                                                                                                | 17                                                                                     
|                                                                                                                                               |                                                                                        
|Forward-looking statements and risk factors                                                                                                    | 18                                                                                     
|                                                                                                                                               |                                                                                        
|Item 3.                                                                                                                                        | Controls and   Procedures                                                               | 20  
|                                                                                                                                               |                                                                                         |     
|Part II                                                                                                                                       
|                                                                                                                                              
|Other Information                                                                                                                             
|                                                                                                                                              
|Item 2.                                                                                                                                        | Changes in Securities and Use of Proceeds                                               | 21  
|                                                                                                                                               |                                                                                         |     
|Item 6.                                                                                                                                        | Exhibits and Reports on form 8-K                                                        | 23  
|                                                                                                                                               |                                                                                        
|Signatures                                                                                                                                     | 28                                                                                     



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EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET

|                                                                                                                                          |  | June 30,   2004 |             | December 31,   2003 |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ----------- | ------------------- | -
|                                                                                                                                          |  |                 |             |                     |  
|                                                                                                                                          |  | (unaudited)     |             | (audited)           |  
|Assets                                                                                                                                    |  |                 |             |                     |  
|Current   assets:                                                                                                                         |  |                 |             |                     |  
|Cash and cash equivalents                                                                                                                 |  | $               | 8,954,181   |                     | $
|Accounts receivable, net of allowance for doubtful accounts of   $50,000                                                                  |  |                 | 9,070,119   |                     |  
|Note receivable                                                                                                                           |  |                 | 45,000      |                     |  
|Prepaid expenses and other current assets                                                                                                 |  |                 | 448,631     |                     |  
|                                                                                                                                          |  |                 |             |                     |  
|Total   current assets                                                                                                                    |  |                 | 18,517,931  |                     |  
|Property and   equipment, net                                                                                                             |  |                 | 3,110,082   |                     |  
|Restricted   certificates of deposit                                                                                                      |  |                 | 36,689      |                     |  
|Goodwill                                                                                                                                  |  |                 | 3,913,182   |                     |  
|Deferred   income tax benefit, net of valuation allowance                                                                                 |  |                 | 2,000,000   |                     |  
|Other assets                                                                                                                              |  |                 | 557,796     |                     |  
|                                                                                                                                          |  |                 |             |                     |  
|Total assets                                                                                                                              |  | $               | 28,135,680  |                     | $
|                                                                                                                                          |  |                 |             |                     |  
|Liabilities and Stockholders Equity                                                                                                      |  |                 |             |                     |  
|Current   liabilities:                                                                                                                    |  |                 |             |                     |  
|Accounts payable and accrued expenses                                                                                                     |  | $               | 1,217,769   |                     | $
|Accrued purchase price payable for Interboro Institute, Inc                                                                               |  |                 | 2,651,702   |                     |  
|Deferred revenue                                                                                                                          |  |                 | 3,582,313   |                     |  
|Notes payable                                                                                                                             |  |                 | 318,907     |                     |  
|Current portion of capitalized lease obligations                                                                                          |  |                 | 355,395     |                     |  
|                                                                                                                                          |  |                 |             |                     |  
|Total   current liabilities                                                                                                               |  |                 | 8,126,086   |                     |  
|Accrued purchase price payable for Interboro, net of current portion                                                                      |  |                 |            |                     |  
|Capital lease obligations, net of current portion                                                                                         |  |                 | 684,034     |                     |  
|Notes payable                                                                                                                             |  |                 | 447,997     |                     |  
|Deferred rent                                                                                                                             |  |                 | 364,187     |                     |  
|                                                                                                                                          |  |                 |             |                     |  
|Total   liabilities                                                                                                                       |  |                 | 9,622,304   |                     |  
|Stockholders   equity:                                                                                                                   |  |                 |             |                     |  
|Preferred   stock - $.0001 par value: authorized 1,000,000 shares, outstanding 0 shares                                                   |  |                 |            |                     |  
|Common stock   - $.0001 par value; authorized 20,000,000 shares: issued and outstanding 12,208,646, and 10,862,452 shares,   respectively |  |                 | 1,242       |                     |  
|Additional   paid-in capital                                                                                                              |  |                 | 49,285,403  |                     |  
|Accumulated   deficit                                                                                                                     |  |                 | (30,773,269 | )                   |  
|                                                                                                                                          |  |                 |             |                     |  
|Stockholders   equity                                                                                                                    |  |                 | 18,513,376  |                     |  
|                                                                                                                                          |  |                 |             |                     |  
|Total   liabilities and stockholders equity                                                                                              |  | $               | 28,135,680  |                     | $
|                                                                                                                                          |  |                 |             |                     |  

See Notes to Consolidated Financial Statements

1



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EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF OPERATIONS (unaudited)

|                                                    |  | Three months ended   June 30, |            | Six Months ended   June 30, |  
|--------------------------------------------------- |  | ----------------------------- | ---------- | --------------------------- | -
|                                                    |  |                               |            |                             |  
|                                                    |  | 2004                          |            | 2003                        |  
|                                                    |  |                               |            |                             |  
|Revenue                                             |  | $                             | 5,833,139  |                             | $
|                                                    |  |                               |            |                             |  
|Operating   expenses:                               |  |                               |            |                             |  
|Cost of   revenue                                   |  |                               | 1,774,059  |                             |  
|Selling,   general and administrative expenses      |  |                               | 4,703,361  |                             |  
|                                                    |  |                               |            |                             |  
|Total   operating expenses                          |  |                               | 6,477,420  |                             |  
|                                                    |  |                               |            |                             |  
|Income/   (loss) from operations                    |  |                               | (644,281   | )                           |  
|Other income   (expense):                           |  |                               |            |                             |  
|Interest   expense                                  |  |                               | (70,070    | )                           |  
|Interest   income                                   |  |                               | 29,727     |                             |  
|                                                    |  |                               |            |                             |  
|Pre-tax   income/(loss)                             |  |                               | (684,624   | )                           |  
|Provision   for income taxes                        |  |                               | (100,000   | )                           |  
|                                                    |  |                               |            |                             |  
|Net   income/(loss)                                 |  |                               | (584,624   | )                           |  
|Accreted   value of series B preferred              |  |                               |           |                             |  
|Undeclared   dividends on preferred series B        |  |                               |           |                             |  
|                                                    |  |                               |            |                             |  
|Income/(loss)   available to common stockholders    |  | $                             | (584,624   | )                           | $
|                                                    |  |                               |            |                             |  
|Income/(loss)   per common share:                   |  |                               |            |                             |  
|Basic                                               |  | $                             | (0.05      | )                           | $
|Diluted                                             |  | $                             | (0.05      | )                           | $
|Weighted   average of number of shares outstanding: |  |                               |            |                             |  
|Basic                                               |  |                               | 12,146,319 |                             |  
|Diluted                                             |  |                               | 12,146,319 |                             |  

See Notes to Consolidated Financial Statements

2



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EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CASH FLOWS  (unaudited)

|                                                                                   |  | Six months ended June 30, |           
|---------------------------------------------------------------------------------- |  | ------------------------- | ----------
|                                                                                   |  |                           |           
|                                                                                   |  | 2004                      |           
|                                                                                   |  |                           |           
|Cash flows   from operating activities:                                            |  |                           |           
|Net income                                                                         |  | $                         | 1,509,817 
|Adjustments   to reconcile net income to net cash used    in operating activities: |  |                           |           
|Depreciation   and amortization                                                    |  |                           | 373,201   
|Non cash   compensation expense                                                    |  |                           | 21,600    
|Changes in   operating assets and liabilities:                                     |  |                           |           
|Increase in   accounts receivable                                                  |  |                           | (6,354,701
|Increase in   prepaid expenses and other current assets                            |  |                           | (345,262  
|Increase in   accounts payable and accrued expenses                                |  |                           | 369,592   
|Increase/(decrease)   in deferred revenue                                          |  |                           | 2,574,693 
|Increase in   deferred rent                                                        |  |                           | 364,187   
|Increase in   accrued costs related to discontinued operations                     |  |                           |          
|                                                                                   |  |                           |           
|Net cash   used in operating activities                                            |  |                           | (1,486,873
|                                                                                   |  |                           |           
|Cash flows   used in investing activities:                                         |  |                           |           
|Deposits   required                                                                |  |                           | (285,840  
|Return of   restricted certificates of deposit                                     |  |                           | 254,662   
|Purchase of   property and equipment                                               |  |                           | (862,516  
|Net decrease   in notes receivable                                                 |  |                           | 45,000    
|Payment on   accrued purchase price of Interboro                                   |  |                           | (256,522  
|                                                                                   |  |                           |           
|Net cash   used in investing activities                                            |  |                           | (1,105,216
|                                                                                   |  |                           |           
|Cash flows   from financing activities:                                            |  |                           |           
|Principal   payments under capital lease obligations                               |  |                           | (264,731  
|Principal   payments of notes payable                                              |  |                           | (678,300  
|Proceeds   from issuance of common stock                                           |  |                           | 9,348,840 
|Proceeds   from exercise of warrants and options                                   |  |                           | 618,354   
|                                                                                   |  |                           |           
|Net cash   provided by financing activities                                        |  |                           | 9,024,163 
|                                                                                   |  |                           |           
|Net   increase/(decrease) in cash and cash equivalents                             |  |                           | 6,432,074 
|Cash and   cash equivalents at beginning of period                                 |  |                           | 2,522,107 
|                                                                                   |  |                           |           
|Cash and   cash equivalents at end of period                                       |  | $                         | 8,954,181 
|                                                                                   |  |                           |           
|Supplemental   schedule of cash flow information:                                  |  |                           |           
|Cash paid   during the period for:                                                 |  |                           |           
|Interest                                                                           |  | $                         | 116,406   
|                                                                                   |  |                           |           
|Taxes                                                                              |  | $                         | 325,645   
|                                                                                   |  |                           |           
|Supplemental   schedule of non-cash financing activity:                            |  |                           |           
|Capital   lease obligations incurred                                               |  | $                         | 906,161   
|                                                                                   |  |                           |           

See Notes to Consolidated Financial Statements

3



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Notes to Consolidated Financial Statements

Note 1  Business and Basis of Presentation

The accompanying consolidated financial statements include the accounts of EVCI Career Colleges Holding Corp. and its wholly-owned subsidiaries, Interboro Institute, Inc. (Interboro), and Interboro Holding, Inc.  Reference to we, our, and us mean EVCI and its subsidiaries unless the context requires otherwise.  All intercompany balances and transactions have been eliminated.

EVCI provides on-campus career college education, presently through its wholly-owned subsidiary, Interboro.  Interboro is a two-year college that offers degree programs leading to the Associate of Occupational Studies degree.  It has a main campus in mid-town Manhattan and an extension center in Flushing, New York and in the Washington Heights section of Manhattan, New York.  Interboro also has a college site in Yonkers, New York.  We acquired Interboro in January 2000.

The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the requirements of item 310(b) of Regulation S-B.  Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission.  The financial statements reflect all adjustments (consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown.  There have been no significant changes in our accounting policies since December 31, 2003.

Our results from operations for the interim period are not indicative of the results expected for the full fiscal year or any future period and should be read in conjunction with our audited financial statements as of December 31, 2003 and for the year then ended, and the notes thereto, in our 10-KSB for the year ended December 31, 2003.

Note 2  Earnings Per Share

Statement of Financial Accounting Standards (SFAS) No. 128, Earnings per Share, requires dual presentation of basic earnings per share (EPS) and diluted EPS on the face of all statements for all entities with complex capital structures.  Basic EPS is computed as net earnings available to common stockholders divided by the weighted-average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock based compensation including stock options, warrants and convertible securities.  A reconciliation of shares used in calculating basic and diluted earnings per share follows:

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|                                                                        |  | Three months ended   June 30, |            | Six months ended   June 30, | 
|----------------------------------------------------------------------- |  | ----------------------------- | ---------- | --------------------------- | 
|                                                                        |  |                               |            |                             | 
|                                                                        |  | 2004                          |            | 2003                        | 
|                                                                        |  |                               |            |                             | 
|Basic   weighted average number of common shares outstanding            |  |                               | 12,146,319 |                             | 
|Effect of   assumed exercise of outstanding options                     |  |                               |           |                             | 
|Effect of   assumed exercise of outstanding warrants                    |  |                               |           |                             | 
|Effect of   assumed conversion of Series B preferred stock              |  |                               |           |                             | 
|                                                                        |  |                               |            |                             | 
|Diluted   weighted average number of shares of common stock outstanding |  |                               | 12,146,319 |                             | 
|                                                                        |  |                               |            |                             | 
|Options and   warrants not included above*                              |  |                               | 1,453,096  |                             | 
|                                                                        |  |                               |            |                             | 

|                                                            
|------------------------------------------------------------
|*Not   included because their effect would be anti-dilutive.

Note 3  Revenue Recognition

We recognize our revenue ratably over the semester in which courses are given and as services are performed.  The total deferred revenue at June 30, 2004 was $3,582,313. This deferral will be recorded as revenue in the third quarter of 2004.

Note 4  Income Taxes

No provision for federal income taxes has been made for all periods presented since EVCI recorded net operating loss carryforwards to offset taxable income. We have approximately $24 million of net operating loss carryforwards that we currently can utilize without significant limitation.  These net operating losses have resulted in a deferred tax asset of $8,259,000 based on an effective tax rate of 34%.   Due to the uncertainty regarding the ultimate amount of income tax benefits to be derived from our net operating losses, we have recorded a $6,259,000 valuation allowance, which is reviewed annually at year-end.  Future changes in ownership could substantially limit eventual utilization of these net operating loss carryforwards.  The provisions for income taxes consist of state and city taxes for Interboro.

5



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Note 5  Employee Stock Options

EVCI has elected, in accordance with the provisions of SFAS No. 123, to apply the current accounting rules under opinion No. 25 and related interpretations in accounting for stock options and, accordingly, is presenting the disclosure-only information as required by SFAS No. 123.  If EVCI had elected to recognize compensation cost based on the fair value of the options granted at grant date as prescribed by SFAS No. 123, EVCIs net income and net income per common share would approximate the pro forma amounts shown in the following table:

|                                                                                                                                                |  | Three months ended   June 30, |          | Six months ended   June 30, |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | -------- | --------------------------- | -
|                                                                                                                                                |  |                               |          |                             |  
|                                                                                                                                                |  | 2004                          |          | 2003                        |  
|                                                                                                                                                |  |                               |          |                             |  
|Reported net   income/ (loss)                                                                                                                   |  | $                             | (584,624 | )                           | $
|Add:   stock-based employee compensation expense included in recorded net income,   net of related tax effects                                  |  |                               | 10,800   |                             |  
|Deduct:   total stock-based employee compensation expense determined under fair-value   based method for all awards, net of related tax effects |  |                               | (57,648  | )                           |  
|                                                                                                                                                |  |                               |          |                             |  
|Pro forma   net income/(loss)                                                                                                                   |  | $                             | (631,472 | )                           | $
|                                                                                                                                                |  |                               |          |                             |  
|Reported net   income/(loss) per common share:                                                                                                  |  |                               |          |                             |  
|Basic                                                                                                                                           |  | $                             | (0.05    | )                           | $
|Diluted                                                                                                                                         |  | $                             | (0.05    | )                           | $
|Pro forma   net income per common share:                                                                                                        |  |                               |          |                             |  
|Basic                                                                                                                                           |  | $                             | (0.05    | )                           | $
|Diluted                                                                                                                                         |  | $                             | (0.05    | )                           | $

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The fair value of options granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: no dividend yield, volatility of 136%, risk-free interest rates ranging from 3.08% to 4.14% and an expected life of 3 to 5 years from the date of vesting.  The estimate of fair value is amortized over the option vesting period in determining the pro forma impact.

Note 6  Note Receivable

This note was issued by JIA, Inc., a provider of an integrated suite of software solutions for global direct selling companies.  The note bears interest at 8% per annum.  We agreed to extend the due date of the note from September 30, 2003 to December 31, 2004. Principal payments of $7,500 per month have been made since October 2003 and are current.  The note is convertible into shares of JIA common stock.  We were also issued warrants to purchase 25,000 or 30,000 shares (based on JIAs earnings) of JIAs common stock at $1.00 per share, subject to adjustment.  No value has been assigned to the warrants.

Note 7  Purchase Price Payable for Interboro

On January 14, 2000, EVCI acquired the outstanding shares of Interboro for $672,500 plus 50% of Interboros earnings before interest, taxes, depreciation and amortization (EBITDA) for the three years ended December 31, 2001, 2002, and 2003.  The $672,500 was also payable out of EBITDA.  EVCI has determined that the total purchase price is $3,461,000 inclusive of interest and other costs.  Of this total, $809,000 has been paid, leaving a balance of $2,652,000.  See Item 5 of Part II of this report regarding the favorable award received by EVCI in its arbitration with the former owner of Interboro about the calculation of EBITDA.

Note 8  Stockholders Equity

On March 29, 2004, we sold 1,038,962 shares of our common stock for $10 million, or $9.625 per share, to institutional investors.  The transaction costs were $675,000 and included fees paid to Roth Capital Partners LLC of $600,000 in cash and five year warrants to purchase 62,338 shares of our common stock at $14.338 per share, subject to adjustment.  The proceeds are being used for expansion of Interboros existing sites and for working capital.

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|Item 2. | Managements Discussion and Analysis of   Financial Condition and Results of Operations
|------- | ---------------------------------------------------------------------------------------

The following information should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in our 10-KSB, as amended, for the year ended December 31, 2003, and in conjunction with the financial statements and notes thereto for the three and six month periods ended June 30, 2004 and 2003, included with Item 1 of this report.  Numbers have been rounded and may be approximate.  References in the discussion to EVCI mean EVCI Career Colleges Holding Corp.

Overview

General

Interboros 2004 second quarter results reflect the substantial investments it has made since March 1, 2004, in its achieved and planned growth.  Most of this investment has been by expenditures for salaries and benefits of new personnel.

Interboros growth strategy is not simply about increasing enrollments.  Its significant growth requires personnel, senior management and other resources to ensure that the quality of Interboros academic and administrative operations continues to improve.  Accordingly, Interboro is hiring more qualified and seasoned personnel, improving the operating efficiencies of its existing communications systems and adding new systems.  Interboro personnel are working to further improve retention rates by being more selective in admitting new students and providing intensive remedial instruction for its students.  Furthermore, Interboro is seeking to enhance its reputation by obtaining additional regulatory academic approvals and college-wide accreditation.

Recently, the arbitration with the former owner of Interboro concluded very favorably for us.  Information about the award is included below in Part II, Item 5.

The TAP audit is ongoing, and the TAP auditors and Interboro personnel are fully cooperating with one another.  We expect the audit will be concluded within two to three months.  While we would like to be able to update you with specifics regarding the audits progress, New York State Comptrollers procedures specifically prohibit colleges and universities from publicly disclosing any information until audits are final.

EVCIs stock price and the stock prices of other public companies that operate proprietary colleges have recently declined materially. We believe this has occurred, in significant part, because several of the larger public companies are being scrutinized by regulators and plaintiffs attorneys, primarily as a result of allegations that they may have violated federal Title IV lending requirements, including by fraudulent conduct.

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Pell and TAP funds received by Interboro are grants, not loans.  Interboro does not participate in any external loan program because it has always wanted to avoid potential problems associated with Title IV lending requirements.  With respect to its participation in Pell and TAP grant programs, management continues to believe that any failures to comply strictly with applicable regulations are the result of human error and not patterns of fraudulent conduct.  We are mindful of the increasing level of scrutiny we are subject to as we continue to grow aggressively and are, therefore, upgrading our compliance personnel, systems and controls.

Second Quarter Developments

| |  | Interboros   full-time student enrollments for its summer semester increased to 1,975, in   2004 from 1,080 in 2003, an 83% increase.                                                                                                                                                                                                                                                                                                                   
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | Interboro   received approval from the New York State Education Department for extension   center status at its Washington Heights site.                                                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | In June,   Interboro graduated 305 students, a 42% increase over its 215 graduates in   June 2003.                                                                                                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | In   preparation for anticipated growth, Interboro made substantial investments in   its academic, administrative and financial infrastructure and systems,   particularly by adding personnel and highly qualified management.                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | Interboro   leased an additional 9,000 square feet of space for class rooms and   administrative offices in mid-town Manhattan at 940 Eighth Avenue, between   55th and 56th streets.  This annex to   Interboros main campus on Tenth Avenue and 56th street will be   ready for use by the fall semester.                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | Interboro   significantly upgraded its communications systems in order to accommodate its   continuing growth and to increase operating efficiencies.                                                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | The American   Bar Association visited Interboro in conjunction with its pending application   for ABA approval of its degree in paralegal studies.  Very few paralegal programs at the   two-year college level are ABA approved.    In the exit interview, the ABA team indicated they found general   compliance with ABA standards.  We   expect a recommendation for approval from the site team to be made to the ABA   within the next six months.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | Interboro   submitted its application for accreditation to the Middle States Association   of Colleges and Schools in order to supplement its national accreditation   from the New York State Board of Regents.    Middle States regional accreditation is  highly respected and, accordingly, would significantly enhance   Interboros reputation.                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | EVCI prepaid   $600,000 of notes payable and capitalized leases.                                                                                                                                                                                                                                                                                                                                                                                         

9



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Capacity

At June 30, 2004, Interboros capacity remained at 2,900 full-time students per semester, without increasing afternoon or weekend classes.  Interboro is seeking to double its capacity using a portion of the funds raised in the private placement EVCI completed on March 29, 2004.

The additional 9,000 square feet for a main campus annex, that was leased in the second quarter 2004, and a plan for more efficient utilization of existing classrooms, including by increasing afternoon classes, is expected to provide sufficient capacity at the main campus for students in the fall 2004 semester.  Interboro is also seeking additional annex space for its main campus for classrooms and a new freshmen admissions center.  With the space for annexes that Interboro has procured since June 30, 2004 for its other college sites, and if its plan to increase afternoon classes is successfully implemented, Interboro will have sufficient capacity for its anticipated fall semester enrollments at all of its college sites.  The main campus annex and the three annexes to its other sites have increased the number of Interboro buildings from four to eight.

The rental costs of $50,000 per month for additional leased space for annexes that has been obtained to date, will be included in our results starting September 1, 2004.  Interboros ability to further increase capacity is subject to several factors that include securing sites in a timely manner that are proximate to existing space, that do not restrict Interboros operations and that are available at reasonable rents.

Revenue recognition

Because we recognize revenue ratably over each semester on a weekly basis and the start dates of Interboros three semesters do not coincide with the first day of each of our first three quarters, increases in our enrollment do not directly relate to increases in revenue for the first, second or third quarters.

Seasonality

Interboros revenue varies as a result of changes in the level of its enrollments. Most colleges and universities traditionally experience a greater seasonal increase in enrollments for the fall semester over the spring semester in an academic year (summer, fall and spring semesters).  Since we acquired Interboro, spring semester enrollment has been greater than the immediately preceding fall semesters enrollment.  Due to our expansion and progress in increasing retention of Interboro students, we are experiencing record enrollment for each succeeding fall, spring and summer semester.  As in most colleges and universities, enrollment during the summer semester is traditionally significantly lower than the remainder of the same academic year.  As a result of these factors, total student enrollment and net revenue are typically highest in our fourth and first quarters, which
include October through March.

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Comparison of three months ended June 30, 2004 to three months ended June 30, 2003.

The following table summarizes our operating results as a percentage of our revenue for the second quarters of 2004 and 2003.

|                                             |  | Three Months Ended   June 30 |      
|-------------------------------------------- |  | ---------------------------- | -----
|                                             |  |                              |      
|                                             |  | 2004                         |      
|                                             |  |                              |      
|Revenue:                                     |  |                              | 100.0
|                                             |  |                              |      
|Operating expenses:                          |  |                              |      
|Cost of revenue                              |  |                              | 30.4 
|Selling, general and administrative expenses |  |                              | 80.6 
|                                             |  |                              |      
|Total   operating expenses                   |  |                              | 111.0
|                                             |  |                              |      
|Loss from operations                         |  |                              | (11.0
|                                             |  |                              |      
|Net loss                                     |  |                              | (10.0
|                                             |  |                              |      
|Net loss available to common stockholders    |  |                              | (10.0
|                                             |  |                              |      

Revenue for the second quarter 2004 increased 49%, or $1,914,000, to $5,833,000 from $3,919,000 for the second quarter 2003.  Each of Interboros sites contributed to the revenue increase:  Manhattan $830,000, Flushing $133,000, Washington Heights $456,000 and Yonkers $520,000. The Yonkers site includes $365,000 of revenue that was deferred in the first quarter 2004 due to the late start of the spring semester at this site.  While Interboros full-time student enrollment for its 2004 summer semester rose by 83% to 1,975 students from 1,080 for its 2003 summer semester, revenue recognized in the second quarter 2004 from this summer enrollment was limited to 54 % of the total revenue attributable to the 2004 summer semester enrollments.  Accordingly, the balance, constituting the $ 3,582,000 of deferred revenue at June 30, 2004, will be recognized in the third quarter.

In addition, Interboro did not receive approximately $328,000 of tuition revenue in the second quarter because it gave scholarships of  this amount primarily to continuing students, in good academic standing, who would not otherwise have been able to attend Interboro.  These scholarships covered the shortfall in TAP and Pell grants and, accordingly, permitted Interboro to improve its retention rates and receive the maximum TAP and Pell grants to which these students are entitled.

For the summer 2004 semester, Interboros full-time enrollment was at 67 % of a capacity of 2900 full-time students as compared to 49 % of a capacity of 2,200 full-time students for the 2003 summer semester.

The fall semester is expected to start on September 13th, which is a week later than originally scheduled, in part because of the anticipated disruption from the Republican National Convention in mid-town Manhattan.  Accordingly, the third quarter 2004 is expected to include nine weeks of revenue from summer semester enrollments and three weeks (as opposed to four weeks) of revenue from fall semester enrollments.  The third quarters revenue will be positively affected by a tuition increase from $3,900 to $4,100 per semester, commencing with this falls semester.  Interboros last tuition increase was from $3,450 to $3,900, effective in the fall 2000.

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Cost of revenue increased by $690,000, to $1,774,000, in the second quarter 2004 from $1,084,000 for the second quarter 2003.  Most all of the increase is attributable to the addition, from June 30, 2003 to June 30, 2004, of 62 new personnel whose salaries are included in cost of revenue. By job description, the number of these personnel were:

|                             |  | 2004    |     |          |  |                
|---------------------------- |  | ------- | --- | -------- |  | ---------------
|                             |  |         |     |          |  |                
|                             |  | June 30 |     | March 31 |  | June 30,   2003
|                             |  |         |     |          |  |                
|Part-time   instructors      |  |         | 99  |          |  | 100            
|Full-time   instructors      |  |         | 40  |          |  | 36             
|Part-time   tutors           |  |         | 24  |          |  | 25             
|Recruiters                   |  |         | 22  |          |  | 16             
|Deans and   department heads |  |         | 16  |          |  | 16             
|Librarians                   |  |         | 5   |          |  | 7              
|                             |  |         |     |          |  |                
|Total                        |  |         | 206 |          |  | 200            
|                             |  |         |     |          |  |                

45% to 50% of our courses are taught by full-time instructors.  Our instructors include developmental specialists who provide additional instruction in our continuing effort to increase retention and graduation rates.

As a result of personnel and salary increases made to support our summer semester growth and anticipated fall semester growth, salaries made up 93% of the cost of revenue in the second quarter 2004 versus 87% in the second quarter 2003. Interboro decided on a longer than normal lead time for some of its new recruiters, and full-time instructors because it wanted to have sufficient time for intensive training in preparation for the fall semester.  Interboros decision to compete for more seasoned and qualified personnel required that salary levels be increased for these new hires. As a percentage of revenue, cost of revenue is expected to improve by the fourth quarter 2004.

The following table sets forth our selling, general and administrative expense items, as a percentage of our total revenue for the second quarters of 2004 and 2003:

|                        |  | Three months ended   June 30, |     
|----------------------- |  | ----------------------------- | ----
|                        |  |                               |     
|                        |  | 2004                          |     
|                        |  |                               |     
|Salaries and   benefits |  |                               | 44.7
|Marketing               |  |                               | 10.7
|Depreciation            |  |                               | 3.6 
|Other   expenses        |  |                               | 18.5
|Professional   fees     |  |                               | 3.1 
|                        |  |                               |     
|Total                   |  |                               | 80.6
|                        |  |                               |     

As a result of personnel and salary increases made to support our significant growth, salaries and benefits increased by 92%, or $1,251,000, to $2,607,000 for the second quarter 2004 from $1,356,000 for the second quarter 2003.  All employee costs that are not included in cost of revenue are included in this category, including benefit costs for all of our employees.  Substantially all of the increase in these costs is attributable to the addition, from June 30, 2003 to June 30, 2004, of 82 personnel whose salaries and benefits are included in selling general and administrative expense.  This is an addition to the salaries of the 62 new personnel that are included in cost of revenue.

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By job category the number of these personnel were:

|                            |  | 2004    |     |          |  |                
|--------------------------- |  | ------- | --- | -------- |  | ---------------
|                            |  |         |     |          |  |                
|                            |  | June 30 |     | March 31 |  | June 30,   2003
|                            |  |         |     |          |  |                
|Student   support services  |  |         | 68  |          |  | 46             
|Security                    |  |         | 24  |          |  | 19             
|Financial   aid             |  |         | 20  |          |  | 18             
|Technology                  |  |         | 20  |          |  | 23             
|Executives                  |  |         | 16  |          |  | 16             
|Accounting                  |  |         | 14  |          |  | 13             
|Admissions   and placement  |  |         | 13  |          |  | 13             
|Registrar                   |  |         | 12  |          |  | 15             
|Maintenance                 |  |         | 12  |          |  | 12             
|Administrative   assistants |  |         | 7   |          |  | 6              
|                            |  |         |     |          |  |                
|Total                       |  |         | 206 |          |  | 181            
|                            |  |         |     |          |  |                

A significant contribution to the increase in salaries and benefits resulted from hiring personnel needed to support the substantial increase in the 2004 summer semester enrollment activities compared to 2003, and activities during the summer that are required to accomplish the aggressive growth rate in enrollments Interboro is attempting to achieve for the 2004 fall semester.  It also resulted from increases in salary levels that were made to attract and retain more seasoned and qualified personnel.   As a percentage of selling, general and administrative expense, salaries and benefits is expected to improve by the fourth quarter 2004.

Marketing costs increased by $220,000 or 54%, to $625,000 for the second quarter 2004 from $405,000 for the second quarter 2003.  These costs are mostly for newspaper and subway advertising.  We also market using telemarketing, direct mail and promotional items.

Professional fees and consulting fees increased by $70,000 to $183,000 for the second quarter 2004, from $113,000 for the second quarter 2003, primarily due to the $65,000 of costs attributable to the arbitration with the previous shareholder of Interboro and additional accounting costs.  This increase was partially offset by a decrease in our reliance upon outside corporate and securities counsel since EVCIs general counsel joined us on January 1, 2004.

Depreciation and amortization decreased by $4,000 to $209,000 for the second quarter 2004 from $213,000 for the second quarter 2003, primarily as a result of facilities lease extensions that resulted in lengthening the period of time over which leasehold improvements are amortized.  This decrease was offset by purchases and leases of equipment costing $426,000 that was needed to support enrollment growth at current locations and to keep current with state of the art instructional and administrative technologies.

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As a result of our actual and anticipated growth, other expenses increased by $227,000 to $1,080,000 for second quarter 2004 from $853,000 for second quarter 2003.  More than 85% of these other expenses consisted of the following:

|                           |  | Three months ended   June 30, |          
|-------------------------- |  | ----------------------------- | ---------
|                           |  |                               |          
|                           |  | 2004                          |          
|                           |  |                               |          
|Rent and   utilities       |  | $                             | 518,000  
|Insurance                  |  |                               | 117,000  
|Equipment   rental expense |  |                               | 56,000   
|Telephone   and internet   |  |                               | 120,000  
|Supplies                   |  |                               | 57,000   
|Travel and   entertainment |  |                               | 83,000   
|Investor   relations       |  |                               | 24,000   
|Taxes                      |  |                               | 36,000   
|                           |  |                               |          
|                           |  | $                             | 1,011,000
|                           |  |                               |          

Net loss available to common stockholders increased by $297,000 to $585,000 for the second quarter 2004 from $288,000 for the same quarter 2003.  Our net loss in 2003 was increased by $255,000 for the accreted value of warrants and transaction costs and undeclared preferred stock dividends.  These charges related to our previously outstanding Series B preferred stock and, accordingly, will not recur.

Comparison of six months ended June 30, 2004 to six months ended June 30, 2003.

The following table summarizes our operating results as a percentage of our revenue for the six months ended June 2004 and the six months ended June 2003.

|                                              |  | Six months ended   June 30, |      
|--------------------------------------------- |  | --------------------------- | -----
|                                              |  |                             |      
|                                              |  | 2004                        |      
|                                              |  |                             |      
|Revenue:                                      |  |                             | 100.0
|                                              |  |                             |      
|Operating expenses:                           |  |                             |      
|Cost of revenue                               |  |                             | 22.7 
|Selling, general and administrative expenses  |  |                             | 64.3 
|                                              |  |                             |      
|Total   operating expenses                    |  |                             | 87.0 
|                                              |  |                             |      
|Income from operations                        |  |                             | 13.1 
|                                              |  |                             |      
|Net income                                    |  |                             | 10.5 
|                                              |  |                             |      
|Net income   available to common stockholders |  |                             | 10.5 
|                                              |  |                             |      

Revenue for the six months ended June 2004 increased 44%, or $4,360,000, to $14,321,000 from $9,961,000 for the first six months of 2003.  Net of a $95,000 decrease in revenue at EVCI, each of Interboros sites contributed to the net revenue increase:  Manhattan $2,870,000, Flushing $342,000, Washington Heights $759,000 and Yonkers $484,000.  While Interboros full-time enrollment for the 2004 spring and summer semesters increased by 66% to 4,775 students from 2,880 in 2003, revenue recognized in the second quarter 2004 from summer enrollment was limited to 54 % of the total revenue attributable to these 2004 enrollments.  Accordingly, the balance, constituting the $3,582,000 of deferred revenue at June 30, 2004, will be recognized in the third quarter.

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In addition, Interboro did not receive approximately $675,000 of tuition revenue in the first six months 2004 because it gave scholarships of this amount primarily to continuing students, in good academic standing, who otherwise would not have not been able to attend Interboro.  These scholarships covered the shortfall in TAP and Pell grants and, accordingly, permitted Interboro to improve its retention rates and receive the maximum TAP and Pell grants to which these students were entitled.

Cost of revenue increased by $892,000 to $3,246,000 for the first six months of 2004 from $2,354,000 for the six months of 2003.  Most of the increase is attributable to the addition, from June 30, 2003 to June 30, 2004, of 62 personnel whose salaries are included in cost of revenue.  As a result of personnel and salary increases made to support our actual and anticipated growth, salaries made up 93% of the cost of revenue for the six months ended June 30, 2004 versus 89% for the six months ended June 30, 2003.

By job description, the number of these personnel were:

|                             |  | 2004    |     |           |  |                
|---------------------------- |  | ------- | --- | --------- |  | ---------------
|                             |  |         |     |           |  |                
|                             |  | June 30 |     | January 1 |  | June 30,   2003
|                             |  |         |     |           |  |                
|Part-time   instructors      |  |         | 99  |           |  | 76             
|Full-time   instructors      |  |         | 40  |           |  | 32             
|Part-time   tutors           |  |         | 24  |           |  | 24             
|Recruiters                   |  |         | 22  |           |  | 16             
|Deans and   department heads |  |         | 16  |           |  | 8              
|Librarians                   |  |         | 5   |           |  | 6              
|                             |  |         |     |           |  |                
|Total                        |  |         | 206 |           |  | 162            
|                             |  |         |     |           |  |                

The following table sets forth our selling, general and administrative expense items as a percentage of our total revenue for the six months ended June 30, 2004 and 2003:

|                        |  | Six months ended June 30, |     
|----------------------- |  | ------------------------- | ----
|                        |  |                           |     
|                        |  | 2004                      |     
|                        |  |                           |     
|Salaries and   benefits |  |                           | 33.6
|Marketing               |  |                           | 9.3 
|Depreciation            |  |                           | 2.6 
|Other   expenses        |  |                           | 16.5
|Professional   fees     |  |                           | 2.3 
|                        |  |                           |     
|Total                   |  |                           | 64.3
|                        |  |                           |     

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As a result of personnel and salary increases made to support our actual and anticipated growth, salaries and benefits increased by 69%, or $1,960,000 to $4,807,000 for the six months ended June 30, 2004 from $2,847,000 for the six months ended June 2003.  This is in addition to the salaries of the 62 new personnel that are included in cost of revenue.  By job category the number of Interboros selling, general and administrative personnel were:

|                           |  | 2004    |     |           |  |                
|-------------------------- |  | ------- | --- | --------- |  | ---------------
|                           |  |         |     |           |  |                
|                           |  | June 30 |     | January 1 |  | June 30,   2003
|                           |  |         |     |           |  |                
|Student   Support Services |  |         | 68  |           |  | 29             
|Security                   |  |         | 24  |           |  | 13             
|Financial   aid            |  |         | 20  |           |  | 16             
|Technology                 |  |         | 20  |           |  | 16             
|Executives                 |  |         | 16  |           |  | 16             
|Accounting                 |  |         | 14  |           |  | 11             
|Admissions   & Placement   |  |         | 13  |           |  | 12             
|Registrar                  |  |         | 12  |           |  | 9              
|Maintenance                |  |         | 12  |           |  | 10             
|Administrative   Assistant |  |         | 7   |           |  | 4              
|                           |  |         |     |           |  |                
|Total                      |  |         | 206 |           |  | 136            
|                           |  |         |     |           |  |                

Marketing costs increased by $439,000 or 49%, to $1,335,000 for the six months ended June 2004 from $896,000 for the six months ended June 2003.  These costs are mostly for newspaper and subway advertising.  We also market using telemarketing, direct mail and promotional items.

Professional fees and consulting fees decreased by $74,000 to $328,000 for the six months ended June 30, 2004 from $402,000 for the six months ended June 2003 due primarily to a decrease in reliance upon corporate and securities outside counsel since EVCIs general counsel joined us on January 1, 2004.  This decrease was partially offset by costs of $95,000 attributable to the arbitration with the prior shareholder of Interboro and additional accounting costs.

Depreciation and amortization decreased by $45,000 to $373,000 for the six months ended June 30, 2004 from $418,000 for six months ended June 30, 2003, primarily as a result of facilities lease extensions that extend the period of time over which leasehold improvements are amortized.  This decrease was offset by purchase and leases of equipment costing approximately $900,000 that was needed to support our enrollment growth at our current locations and to keep current with state of the art instructional and administrative technologies.

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As a result of our actual and anticipated growth, other expenses increased by $594,000 to $2,364,000 for six months ended June 30, 2004 from $1,770,000 for six months ended June 30, 2003.  More than 85% of these other expenses consisted of the following:

|                           |  | Six months ended June 30, |          
|-------------------------- |  | ------------------------- | ---------
|                           |  |                           |          
|                           |  | 2004                      |          
|                           |  |                           |          
|Rent and   utilities       |  | $                         | 1,040,000
|Insurance                  |  |                           | 210,000  
|Equipment   rental expense |  |                           | 95,000   
|Telephone   and internet   |  |                           | 282,000  
|Supplies                   |  |                           | 176,000  
|Travel and   entertainment |  |                           | 152,000  
|Investor   relations       |  |                           | 61,000   
|Taxes                      |  |                           | 75,000   
|                           |  |                           |          
|                           |  | $                         | 2,091,000
|                           |  |                           |          

Net income available to common stockholders increased by $938,000 to $1,510,000, or 164%, for the six months ended June 30, 2004 compared to $572,000 for the six months ended June 30, 2003.  Our net income for the first six months of 2003 was reduced by $542,000 for the accreted value of warrants and transaction costs and undeclared preferred stock dividends.  These charges related to our previously outstanding Series B preferred stock and, accordingly, will not recur.

Liquidity and capital resources

Our sources and uses of funds during the second quarter 2004 and our cash balances on January 1, and June 30, 2004 are summarized below:

|Sources:                                          |  |   |            | 
|------------------------------------------------- |  | - | ---------- | 
|Cash   collections from operations                |  | $ | 11,753,000 | 
|Return of   restricted cash                       |  |   | 255,000    | 
|Net proceeds   from private placement             |  |   | 9,349,000  | 
|Proceeds   from exercises of options and warrants |  |   | 618,000    | 
|Proceeds of   note receivable                     |  | $ | 45,000     | 
|                                                  |  |   |            | 
|                                                  |  | $ | 22,020,000 | 
|                                                  |  |   |            | 
|Uses:                                             |  |   |            | 
|Payment of   operating expenses                   |  |   | 13,240,000 | 
|Deposits   required                               |  |   | 285,000    | 
|Payment of   notes payable                        |  |   | 678,000    | 
|Payment of   principle of capital leases          |  |   | 265,000    | 
|Purchase of   property and equipment              |  |   | 863,000    | 
|Payment of   purchase price for Interboro         |  |   | 257,000    | 
|                                                  |  |   |            | 
|                                                  |  |   | 15,588,000 | 
|                                                  |  |   |            | 
|Net increase   in cash                            |  |   | 6,432,000  | 
|                                                  |  |   |            | 
|Cash on hand   January 1, 2004                    |  |   | 2,522,000  | 
|                                                  |  |   |            | 
|Cash on hand   June 30, 2004                      |  | $ | 8,954,000  | 
|                                                  |  |   |            | 

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Information regarding funds received by EVCI during the first six months of 2004 from the private placement and exercises of options and warrants follows:

|No. of Shares |  |  | Price Per Share |        |  | Proceeds | 
|------------- |  |  | --------------- | ------ |  | -------- | 
|              |  |  |                 |        |  |          | 
|1,038,962     |  |  |                 | $9.625 |  |          | 
|117,925       |  |  |                 | 2.12   |  |          | 
|40,000        |  |  |                 | 3.00   |  |          | 
|37,500        |  |  |                 | 5.44   |  |          | 
|23,309        |  |  |                 | 1.20   |  |          | 
|5,000         |  |  |                 | 1.06   |  |          | 
|3,334         |  |  |                 | 1.57   |  |          | 
|3,333         |  |  |                 | 0.70   |  |          | 
|2,500         |  |  |                 | 1.00   |  |          | 

Of our $9,000,000 of accounts receivable at June 30, 2004, Pell and TAP had paid us $3,500,000 by August 9, 2004. The balance of $5,550,000 consists of $4,750,000 due from TAP which has been delayed on account of the New York State Legislatures failure to pass a budget.  As a result of this delay, we had negative cash flow from operations for the six months ended June 30, 2004.  The Higher Education Services Corporation, which administers TAP, recently began providing colleges with estimates of student TAP awards for the 2004 summer and fall semester based on assumptions that there would be no change in TAP for the 2004-2005 budget year.  Based on our past experience with delays in the approval of the New York State budget, our belief is that the amount owed by TAP at June 30, 2004 will be paid in full by October 30, 2004.

We expect that our cash generated from operations and cash on hand will be sufficient to satisfy our cash needs for 2004.  Nevertheless, management may decide to incur indebtedness to implement its expansion plans or raise additional equity for acquisitions.

It is difficult for us to budget our expansion before we are able to secure an appropriate same-site annex because the kind and cost of leasehold improvements may vary substantially from location to location depending on the locations suitability for Interboros operations.  Furthermore, delays in completing construction and becoming fully operational could delay our ability to generate revenue from the same-site annexes.

Forward-looking statements and risk factors

Statements and financial discussion and analysis by our management contained in this 10-QSB that are not historical facts are forward-looking statements.  They reflect managements current views with respect to future events and, accordingly, are subject to certain assumptions, risk and uncertainties, including the risk factors discussed briefly below.  If any of those or other risks actually occur, or should our assumptions prove incorrect, actually results may vary materially from those anticipated by those forward-looking statements.  Furthermore, our business, financial condition and results of operations could be materially and adversely affected.

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| |  | Interboro   Institutes failure to comply with extensive federal and New York State   regulations could have a material adverse impact on its ability to operate   and grow.                                                                                                                
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                             
| |  | Adverse   changes in the rules governing, or the amount or timing of, TAP program   disbursements could materially impede Interboros ability to operate.                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                             
| |  | Adverse   changes in the rules governing, or the amount or timing of, Pell program   disbursements could materially impede Interboros ability to operate.                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                             
| |  | An ongoing   TAP audit could result in Interboro being required to make material refunds   of TAP grants and restate its prior years financials.                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                             
| |  | If Interboro   has a Title IV audit, it could be required to make material refunds of Pell   grants and restate its prior years financials.                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                             
| |  | Interboros   failure to timely and effectively open and operate planned annexes to   existing sites, as a result of construction delays or other causes, could   adversely affect our business and financial results.                                                                      
| |   |                                                                                                                                                                                                                                                                                             
| |  | If Interboro   is unable to obtain additional space within the buildings of its existing   sites or for annexes to its existing sites, in addition to the annex space   already obtained, Interboros same site growth rate could be materially   limited.                                  
| |   |                                                                                                                                                                                                                                                                                             
| |  | If the New   York State Education Department does not give Interboro the requisite   approval to open new college sites or to receive extension center status for   the Yonkers site, Interboros operations and growth could be adversely   affected.                                      
| |   |                                                                                                                                                                                                                                                                                             
| |  | The   seasonality of Interboros enrollments and its continuing investment in its   aggressive growth is expected to produce significant variations in our   results from quarter to quarter.                                                                                               
| |   |                                                                                                                                                                                                                                                                                             
| |  | Interboros   failure to effectively manage its current enrollment or future enrollment   growth could materially hurt our business and prospects.                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                             
| |  | If Interboro   is unable to compete for the more qualified and seasoned personnel and   management that it needs to effectively handle its growth, its operations,   regulatory compliance and financial results could be adversely affected.                                               
| |   |                                                                                                                                                                                                                                                                                             
| |  | Allegations,   even if untrue, that Interboro failed to comply with laws, rules and   regulations relating to TAP or Pell, its accreditation by the New York State   Education Department or its compliance with securities laws could result in   costly and materially adverse litigation.
| |   |                                                                                                                                                                                                                                                                                             
| |  | Our share   price has recently declined quickly and substantially, has ranged greatly   since we went public and may be very volatile in the future as a result of   developments affecting public education companies generally or EVCI   specifically.                                    
| |   |                                                                                                                                                                                                                                                                                             
| |  | The loss of   the services of key management personnel of EVCI or Interboro, could have a   material adverse affect on our operations and growth.                                                                                                                                           

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| |  | Our business   could materially suffer if we divert our resources from operations to making   acquisitions or if we make acquisitions that do not meet our expectations.                                      
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                               
| |  | A change in   control of EVCI would adversely affect Interboros participation in Pell and   TAP grants.                                                                                                      
| |   |                                                                                                                                                                                                               
| |  | A change in   control of EVCI would cause regulatory and accrediting authorities to return   Interboro to a probationary status.                                                                              
| |   |                                                                                                                                                                                                               
| |  | Terrorist   activity or the threat of it, in the New York City metropolitan area could   adversely affect Interboro.                                                                                          
| |   |                                                                                                                                                                                                               
| |  | Interboros   inability to foster and maintain relationships with community organizations   in the communities where its college sites are located could adversely affect   those sites.                      
| |   |                                                                                                                                                                                                               
| |  | Future   changes in ownership of our common stock could substantially limit the   utilization of our net operating loss carryforwards.                                                                        
| |   |                                                                                                                                                                                                               
| |  | Actual or   potential future sales of our common stock by management could have an   adverse affect on the market price of our common stock.                                                                  
| |   |                                                                                                                                                                                                               
| |  | Provisions   of laws or regulations, our certificate of incorporation and by-laws and   agreements with our executive officers could discourage takeover attempts and   other investments in our common stock.
| |   |                                                                                                                                                                                                               
| |  | Our   classified board limits stockholder voting for the election and removal of directors.                                                                                                                   
| |   |                                                                                                                                                                                                               
| |  | Indemnification   and limitation of liability of our officers and directors may insulate them   from accountability to stockholders at substantial cost to us.                                                
| |   |                                                                                                                                                                                                               

Item 3.  Controls and Procedures

(a)          Our management, including our chief executive officer and president and our chief financial officer, have conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934) at the end of the period covered by this report.  Based upon that evaluation, our chief executive officer and president and our chief financial officer have concluded that our disclosure controls and procedures as of the end of the period covered by this report have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms.

(b)          No change in our internal control over financial reporting occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

20



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##### 

PART IIOTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

During the second quarter of 2004, we received funds from exercise of warrants to purchase our common stock, all in reliance upon an exemption from registration under the Securities Act of 1933 (the Act) as follows:

|Description (Date)         |  | No. of Shares |         | Proceeds |  
|-------------------------- |  | ------------- | ------- | -------- | -
|                           |  |               |         |          |  
|Warrant   exercise (April) |  |               | 20,000  |          | $
|Warrant   exercise (May)   |  |               | 117,925 |          |  

The shares issued upon exercise of the warrants were issued to accredited investors and, accordingly, were exempt from registration under the Act in reliance upon Regulation D of the SEC.

Item 5.  Other Information

In August, 2004, we received the final award in the arbitration captioned Bruce R. Kalisch v. Interboro Holdings, Inc. and Educational Video Conferencing, Inc. a/k/a EVCI Career Colleges, Inc. We prevailed in full on the central issue of the arbitration.

This issue was Mr. Kalischs claim that EVCI had made excessive and improper allocations of its overhead to Interboro that resulted in EVCIs calculation of a lower purchase price for its acquisition of Interboro in January 2000.  Under the Stock Purchase Agreement, Mr. Kalisch is entitled to 50% of Interboros earnings, before interest, taxes, depreciation and amortization (EBITDA) for the years 2001, 2002 and 2003.  The award concluded that EVCI correctly calculated EBITDA for 2001 and 2002. Because the arbitration and the hearings were commenced before any calculation of 2003 EBITDA was due, the arbitrator ruled that all issues relating to Interboros 2003 EBITDA are outside the scope of the arbitration.  Findings and conclusions of the arbitrator include the following:

The record clearly shows that Interboro richly benefited from the strategy and work of EVCIs new management.  .  .  .  [T]here was ample, detailed and credible evidence adduced at the hearing that senior management spent substantial time and energy in turning around the fortunes of Interboro and expanding its campuses to increase enrollment and revenue.  There was no credible evidence to the contrary.

In sum, the full weight of the evidence adduced at the hearing supports the finding that EVCI, with the independent and competent oversight of its auditor GGK, made proper allocations of corporate overhead from EVCI to Interboro during the relevant time period.

21



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##### 

The issues related to 2003 EBITDA include EVCIs calculation of 2003 EBITDA and its claim that the EBITDA must be reduced by the amount of any and all TAP disallowances resulting from the ongoing TAP audit.  Mr. Kalisch has objected to this claim as it relates to disallowances relating to 2001, 2002 or 2003. He has also objected to EVCIs claim that the ongoing TAP audit gives it the right to escrow the unpaid portion of the purchase price pending a completion of the TAP audit and a determination of the amount, if any, by which EBITDA should be reduced.  A reduction in the calculation of EBITDA would reduce the purchase price payable for Interboro to Mr. Kalisch by 50% of the amount of the reduction.

On a collateral issue the arbitrator also held that EVCI was not entitled to reduce the purchase price by $138,000 for breaches of representation and warranty.

Until paid, the $2,652,000 of the unpaid purchase price will accrue interest at 9% per annum.

22



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##### 

Item 6.  Exhibits and Reports on Form 8-K

(a)     The following exhibits are filed as part of this report.

|Exhibit No.* |    | Description   of Exhibit                                                                                                                   
|------------ | -- | -------------------------------------------------------------------------------------------------------------------------------------------
|             |    |                                                                                                                                            
|3.1[1]       | -- | Certificate   of Incorporation of the Registrant.                                                                                          
|             |    |                                                                                                                                            
|3.2[1]       | -- | Certificate   of Merger of Educational Video Conferencing, Inc. (a New York Corporation)   into the Registrant (a Delaware Corporation).   
|             |    |                                                                                                                                            
|3.3[1]       | -- | Certificate   of Correction of the Certificate of Incorporation of the Registrant.                                                         
|             |    |                                                                                                                                            
|3.4[3]       | -- | Certificate   of Amendment, dated February 22, 1999, to Certificate of Incorporation of the   Registrant.                                  
|             |    |                                                                                                                                            
|3.5[10]      | -- | Amended and   Restated By-Laws of the Registrant.                                                                                          
|             |    |                                                                                                                                            
|3.6[5]       | -- | Certificate   Eliminating Reference to Series A 7.5% Convertible Preferred Stock from the   Certificate of Incorporation of the Registrant.
|             |    |                                                                                                                                            
|3.7[17]      | -- | Certificate   of Amendment, dated May 23, 2002, to Certificate of Incorporation of the   Registrant.                                       
|             |    |                                                                                                                                            
|3.8[5]       | -- | Certificate   Eliminating Reference to Series B 7% Convertible Preferred stock from the   Certificate of Incorporation of the Registrant.  
|             |    |                                                                                                                                            
|3.9[5]       | -- | Certificate   Eliminating Reference to Series C 8% Convertible Preferred stock from the   Certificate of Incorporation of the Registrant.  
|             |    |                                                                                                                                            
|4.2[2]       | -- | Form of   Common Stock certificate.                                                                                                        
|             |    |                                                                                                                                            
|4.3[4]       | -- | Warrant   Agreement, dated January 14, 2000, between the Registrant and Bruce. R.   Kalisch.                                               
|             |    |                                                                                                                                            
|4.4[6]       | -- | Warrant   Agreement, dated April 18, 2000, between the Registrant and Peter J. Solomon   Company Limited.                                  
|             |    |                                                                                                                                            
|4.5[7]       | -- | Form of   Warrant issued to each seller of shares of ICTS, Inc.                                                                            
|             |    |                                                                                                                                            
|4.6[8]       | -- | Warrant to   purchase 50,000 shares of common stock of the Registrant issued to Rosenthal   & Rosenthal, Inc. on July 12, 2002.            
|             |    |                                                                                                                                            
|4.7[9]       | -- | Form of   Registrants Common Stock Purchase Warrant issued to three institutional   investors on August 1, 2003.                          

23



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##### 

|4.8[15]   | -- | Common Stock   Purchase Warrant issued in September 2003, to purchase 45,000 shares of the   Registrants common stock.                                                                  
|--------- | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          |    |                                                                                                                                                                                          
|4.9[18]   | -- | Common Stock   Purchase Warrant issued to placement agent on March 29, 2004.                                                                                                             
|          |    |                                                                                                                                                                                          
|10.1[10]  | -- | Employment   Agreement between the Registrant and Dr. Arol I. Buntzman, dated January 1,   2003.                                                                                         
|          |    |                                                                                                                                                                                          
|10.2[10]  | -- | Employment   Agreement between the Registrant and Dr. John J. McGrath, Dated January 1,   2003.                                                                                          
|          |    |                                                                                                                                                                                          
|10.3[10]  | -- | Employment   Agreement between the Registrant and Richard Goldenberg, dated January 1,   2003.                                                                                           
|          |    |                                                                                                                                                                                          
|10.4[11]  | -- | Amended and   Restated 1998 Incentive Stock Option Plan of the Registrant.                                                                                                               
|          |    |                                                                                                                                                                                          
|10.5[12]  | -- | 2001   Non-Qualified Stock Option Plan.                                                                                                                                                  
|          |    |                                                                                                                                                                                          
|10.6[10]  | -- | Form of   Change in Control Agreement used for agreements the Registrant has with each   of Dr. Arol I. Buntzman, Dr. John J. McGrath, and Richard Goldenberg, dated   February 11, 2003.
|          |    |                                                                                                                                                                                          
|10.7[1]   | -- | Form of   Indemnification Agreement.                                                                                                                                                     
|          |    |                                                                                                                                                                                          
|10.8[4]   | -- | Stock   Purchase Agreement, dated January 14, 2000, among Bruce R. Kalisch, Interboro   Holding, Inc. and Interboro Institute, Inc.                                                      
|          |    |                                                                                                                                                                                          
|10.9[13]  | -- | Lease   Agreement between 444 Realty Company and Interboro Institute, Inc. dated July   27, 1983, as amended by agreements dated June 20, 1988, June 1, 1992, and   February 1, 1993.    
|          |    |                                                                                                                                                                                          
|10.10[13] | -- | Lease   Agreement between Interboro Institute, Inc. JUYI, Inc., dated January 26,   2001.                                                                                                
|          |    |                                                                                                                                                                                          
|10.11[9]  | -- | Promissory   Note for $1,000,000, dated August 4, 2003, payable by Interboro Institute,   Inc. to North Fork Bank.                                                                       
|          |    |                                                                                                                                                                                          
|10.12[9]  | -- | Form of the   Registrants Subscription and Registration Rights Agreement relating to the   Registrants August 1, 2003, issuance of common stock and warrants.                          
|          |    |                                                                                                                                                                                          
|10.13[14] | -- | Settlement   Agreement made October 3, 2003, between Amaranth Trading L.L.C. and the   Registrant.                                                                                       

24



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##### 

|10.14[14] | -- | Form of   Share Claim Purchase and Registration Rights Agreement between the Registrant   and each investor acquiring a portion of the Amaranth Trading L.L.C.s rights   to claims to shares of EVCIs common stock upon conversion of Series B   Preferred shares.
|--------- | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          |    |                                                                                                                                                                                                                                                                     
|10.15[15] | -- | Third   Amendment and Lease Extension Agreement, made as of August 1, 2003, between   444 Realty Company, L.L.C. and Interboro Institute, Inc.                                                                                                                      
|          |    |                                                                                                                                                                                                                                                                     
|10.16[16] | -- | Ownership   and Registration Rights Agreement, dated November 11, 2003, between the   Registrant and JLF Partners I, L.P., JLF Partners II, L.P. and JLF Offshore   Fund.                                                                                           
|          |    |                                                                                                                                                                                                                                                                     
|10.17[17] | -- | Employment   Agreement between the Registrant and Joseph D. Alperin dated January 1, 2004.                                                                                                                                                                          
|          |    |                                                                                                                                                                                                                                                                     
|10.18[17] | -- | Option   Agreement between the Registrant and Joseph D. Alperin dated January 1, 2004.                                                                                                                                                                              
|          |    |                                                                                                                                                                                                                                                                     
|10.19[17] | -- | Change of   control letter agreement between the Registrant and Joseph D. Alperin dated   January 1, 2004.                                                                                                                                                          
|          |    |                                                                                                                                                                                                                                                                     
|10.20[17] | -- | Agreement,   made February 28, 2004, between Interboro Institute, Inc. and OPEIU Local   153, AFL-CIO.                                                                                                                                                              
|          |    |                                                                                                                                                                                                                                                                     
|10.21[18] | -- | Securities   Purchase Agreement, dated March 29, 2004, by and among the Registrant and   each buyer named in the Schedule of Buyers.                                                                                                                                
|          |    |                                                                                                                                                                                                                                                                     
|10.22[18] | -- | Registration   Rights Agreement, dated March 29, 2004, by and among the Registrant and each   buyer named in the Schedule of Buyers.                                                                                                                                
|          |    |                                                                                                                                                                                                                                                                     
|10.23[19] | -- | Ownership   and Registration Rights Agreement, dated April 2, 2004, by and among the   Registrant, and six funds managed by Wellington Management Company, LLP.                                                                                                     
|          |    |                                                                                                                                                                                                                                                                     
|31.1**    | -- | Certification   of Chief Executive Officer required by Rule 13a-14(a) under the Exchange Act.                                                                                                                                                                       
|          |    |                                                                                                                                                                                                                                                                     
|31.2**    | -- | Certification   of Chief Financial Officer required by Rule 13a-14(a) under the Exchange Act.                                                                                                                                                                       
|          |    |                                                                                                                                                                                                                                                                     
|32.1**    | -- | Certification   of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted   pursuant to Section 906 of Sarbanes-Oxley Act of 2002.                                                                                                                  
|          |    |                                                                                                                                                                                                                                                                     
|32.2**    | -- | Certification   of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted   pursuant to Section 906 of Sarbanes-Oxley Act of 2002.                                                                                                                  

25



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##### 

|                                                                                                         
|---------------------------------------------------------------------------------------------------------
|* Numbers   inside brackets indicate documents from which exhibits have been incorporated   by reference.
|** Filed   herewith.                                                                                     
|                                                                                                         
|[1]                                                                                                      
|                                                                                                         
|[2]                                                                                                      
|                                                                                                         
|[3]                                                                                                      
|                                                                                                         
|[4]                                                                                                      
|                                                                                                         
|[5]                                                                                                      
|                                                                                                         
|[6]                                                                                                      
|                                                                                                         
|[7]                                                                                                      
|                                                                                                         
|[8]                                                                                                      
|                                                                                                         
|[9]                                                                                                      
|                                                                                                         
|[10]                                                                                                     
|                                                                                                         
|[11]                                                                                                     
|                                                                                                         
|[12]                                                                                                     
|                                                                                                         
|[13]                                                                                                     
|                                                                                                         
|[14]                                                                                                     
|                                                                                                         
|[15]                                                                                                     
|                                                                                                         
|[16]                                                                                                     

26



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##### 

|[17] | Incorporated   by reference to the Registrants Form 10-KSB/A for the year ended December   31, 2003.
|---- | -----------------------------------------------------------------------------------------------------
|     |                                                                                                      
|[18] | Incorporated   by reference to the Registrants Form 8-K dated March 29, 2004.                       
|     |                                                                                                      
|[19] | Incorporated   by reference to the Registrants Form 10-QSB for the quarter ended March 31,   2004.  

27



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##### 

SIGNATURES

In accordance with the requirements of the Exchange Act, the issuer caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|Dated:  August 12, 2004 |                                      |                                               
|----------------------- | ------------------------------------ | ----------------------------------------------
|                        |                                      |                                               
|                        | EVCI CAREER   COLLEGES HOLDING CORP.
|                        |                                     
|                        | By:                                  | /s/ Richard   Goldenberg                      
|                        |                                      |                                               
|                        |                                      | Richard   Goldenberg                          
|                        |                                      | Chief   Financial Officer                     
|                        |                                      | (Principal   Financial and Accounting Officer)

28



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##### 

EXHIBIT INDEX

|Exhibit No.* |    | Description   of Exhibit                                                                                                                   
|------------ | -- | -------------------------------------------------------------------------------------------------------------------------------------------
|             |    |                                                                                                                                            
|3.1[1]       | -- | Certificate   of Incorporation of the Registrant.                                                                                          
|             |    |                                                                                                                                            
|3.2[1]       | -- | Certificate   of Merger of Educational Video Conferencing, Inc. (a New York Corporation)   into the Registrant (a Delaware Corporation).   
|             |    |                                                                                                                                            
|3.3[1]       | -- | Certificate   of Correction of the Certificate of Incorporation of the Registrant.                                                         
|             |    |                                                                                                                                            
|3.4[3]       | -- | Certificate   of Amendment, dated February 22, 1999, to Certificate of Incorporation of the   Registrant.                                  
|             |    |                                                                                                                                            
|3.5[10]      | -- | Amended and   Restated By-Laws of the Registrant.                                                                                          
|             |    |                                                                                                                                            
|3.6[5]       | -- | Certificate   Eliminating Reference to Series A 7.5% Convertible Preferred Stock from the   Certificate of Incorporation of the Registrant.
|             |    |                                                                                                                                            
|3.7[17]      | -- | Certificate   of Amendment, dated May 23, 2002, to Certificate of Incorporation of the   Registrant.                                       
|             |    |                                                                                                                                            
|3.8[5]       | -- | Certificate   Eliminating Reference to Series B 7% Convertible Preferred stock from the   Certificate of Incorporation of the Registrant.  
|             |    |                                                                                                                                            
|3.9[5]       | -- | Certificate   Eliminating Reference to Series C 8% Convertible Preferred stock from the   Certificate of Incorporation of the Registrant.  
|             |    |                                                                                                                                            
|4.2[2]       | -- | Form of   Common Stock certificate.                                                                                                        
|             |    |                                                                                                                                            
|4.3[4]       | -- | Warrant   Agreement, dated January 14, 2000, between the Registrant and Bruce. R.   Kalisch.                                               
|             |    |                                                                                                                                            
|4.4[6]       | -- | Warrant   Agreement, dated April 18, 2000, between the Registrant and Peter J. Solomon   Company Limited.                                  
|             |    |                                                                                                                                            
|4.5[7]       | -- | Form of   Warrant issued to each seller of shares of ICTS, Inc.                                                                            
|             |    |                                                                                                                                            
|4.6[8]       | -- | Warrant to   purchase 50,000 shares of common stock of the Registrant issued to Rosenthal   & Rosenthal, Inc. on July 12, 2002.            
|             |    |                                                                                                                                            
|4.7[9]       | -- | Form of   Registrants Common Stock Purchase Warrant issued to three institutional   investors on August 1, 2003.                          

29



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##### 

|4.8[15]   | -- | Common Stock   Purchase Warrant issued in September 2003, to purchase 45,000 shares of the   Registrants common stock.                                                                  
|--------- | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          |    |                                                                                                                                                                                          
|4.9[18]   | -- | Common Stock   Purchase Warrant issued to placement agent on March 29, 2004.                                                                                                             
|          |    |                                                                                                                                                                                          
|10.1[10]  | -- | Employment   Agreement between the Registrant and Dr. Arol I. Buntzman, dated January 1,   2003.                                                                                         
|          |    |                                                                                                                                                                                          
|10.2[10]  | -- | Employment   Agreement between the Registrant and Dr. John J. McGrath, Dated January 1,   2003.                                                                                          
|          |    |                                                                                                                                                                                          
|10.3[10]  | -- | Employment   Agreement between the Registrant and Richard Goldenberg, dated January 1,   2003.                                                                                           
|          |    |                                                                                                                                                                                          
|10.4[11]  | -- | Amended and   Restated 1998 Incentive Stock Option Plan of the Registrant.                                                                                                               
|          |    |                                                                                                                                                                                          
|10.5[12]  | -- | 2001   Non-Qualified Stock Option Plan.                                                                                                                                                  
|          |    |                                                                                                                                                                                          
|10.6[10]  | -- | Form of   Change in Control Agreement used for agreements the Registrant has with each   of Dr. Arol I. Buntzman, Dr. John J. McGrath, and Richard Goldenberg, dated   February 11, 2003.
|          |    |                                                                                                                                                                                          
|10.7[1]   | -- | Form of   Indemnification Agreement.                                                                                                                                                     
|          |    |                                                                                                                                                                                          
|10.8[4]   | -- | Stock   Purchase Agreement, dated January 14, 2000, among Bruce R. Kalisch, Interboro   Holding, Inc. and Interboro Institute, Inc.                                                      
|          |    |                                                                                                                                                                                          
|10.9[13]  | -- | Lease   Agreement between 444 Realty Company and Interboro Institute, Inc. dated July   27, 1983, as amended by agreements dated June 20, 1988, June 1, 1992, and   February 1, 1993.    
|          |    |                                                                                                                                                                                          
|10.10[13] | -- | Lease   Agreement between Interboro Institute, Inc. JUYI, Inc., dated January 26,   2001.                                                                                                
|          |    |                                                                                                                                                                                          
|10.11[9]  | -- | Promissory   Note for $1,000,000, dated August 4, 2003, payable by Interboro Institute,   Inc. to North Fork Bank.                                                                       
|          |    |                                                                                                                                                                                          
|10.12[9]  | -- | Form of the   Registrants Subscription and Registration Rights Agreement relating to the   Registrants August 1, 2003, issuance of common stock and warrants.                          
|          |    |                                                                                                                                                                                          
|10.13[14] | -- | Settlement   Agreement made October 3, 2003, between Amaranth Trading L.L.C. and the   Registrant.                                                                                       



30

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##### 

|10.14[14] | -- | Form of   Share Claim Purchase and Registration Rights Agreement between the Registrant   and each investor acquiring a portion of the Amaranth Trading L.L.C.s rights   to claims to shares of EVCIs common stock upon conversion of Series B   Preferred shares.
|--------- | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          |    |                                                                                                                                                                                                                                                                     
|10.15[15] | -- | Third   Amendment and Lease Extension Agreement, made as of August 1, 2003, between   444 Realty Company, L.L.C. and Interboro Institute, Inc.                                                                                                                      
|          |    |                                                                                                                                                                                                                                                                     
|10.16[16] | -- | Ownership   and Registration Rights Agreement, dated November 11, 2003, between the   Registrant and JLF Partners I, L.P., JLF Partners II, L.P. and JLF Offshore   Fund.                                                                                           
|          |    |                                                                                                                                                                                                                                                                     
|10.17[17] | -- | Employment   Agreement between the Registrant and Joseph D. Alperin dated January 1, 2004.                                                                                                                                                                          
|          |    |                                                                                                                                                                                                                                                                     
|10.18[17] | -- | Option   Agreement between the Registrant and Joseph D. Alperin dated January 1, 2004.                                                                                                                                                                              
|          |    |                                                                                                                                                                                                                                                                     
|10.19[17] | -- | Change of   control letter agreement between the Registrant and Joseph D. Alperin dated   January 1, 2004.                                                                                                                                                          
|          |    |                                                                                                                                                                                                                                                                     
|10.20[17] | -- | Agreement,   made February 28, 2004, between Interboro Institute, Inc. and OPEIU Local   153, AFL-CIO.                                                                                                                                                              
|          |    |                                                                                                                                                                                                                                                                     
|10.21[18] | -- | Securities   Purchase Agreement, dated March 29, 2004, by and among the Registrant and each   buyer named in the Schedule of Buyers.                                                                                                                                
|          |    |                                                                                                                                                                                                                                                                     
|10.22[18] | -- | Registration   Rights Agreement, dated March 29, 2004, by and among the Registrant and each   buyer named in the Schedule of Buyers.                                                                                                                                
|          |    |                                                                                                                                                                                                                                                                     
|10.23[19] | -- | Ownership   and Registration Rights Agreement, dated April 2, 2004, by and among the   Registrant and six funds managed by Wellington Management Company, LLP.                                                                                                      
|          |    |                                                                                                                                                                                                                                                                     
|31.1**    | -- | Certification   of Chief Executive Officer required by Rule 13a-14(a) under the Exchange Act.                                                                                                                                                                       
|          |    |                                                                                                                                                                                                                                                                     
|31.2**    | -- | Certification   of Chief Financial Officer required by Rule 13a-14(a) under the Exchange Act.                                                                                                                                                                       
|          |    |                                                                                                                                                                                                                                                                     
|32.1**    | -- | Certification   of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted   pursuant to Section 906 of Sarbanes-Oxley Act of 2002.                                                                                                                  
|          |    |                                                                                                                                                                                                                                                                     
|32.2**    | -- | Certification   of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted   pursuant to Section 906 of Sarbanes-Oxley Act of 2002.                                                                                                                  



31

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##### 

|                                                                                                         
|---------------------------------------------------------------------------------------------------------
|* Numbers   inside brackets indicate documents from which exhibits have been incorporated   by reference.
|** Filed   herewith.                                                                                     
|                                                                                                         
|[1]                                                                                                      
|                                                                                                         
|[2]                                                                                                      
|                                                                                                         
|[3]                                                                                                      
|                                                                                                         
|[4]                                                                                                      
|                                                                                                         
|[5]                                                                                                      
|                                                                                                         
|[6]                                                                                                      
|                                                                                                         
|[7]                                                                                                      
|                                                                                                         
|[8]                                                                                                      
|                                                                                                         
|[9]                                                                                                      
|                                                                                                         
|[10]                                                                                                     
|                                                                                                         
|[11]                                                                                                     
|                                                                                                         
|[12]                                                                                                     
|                                                                                                         
|[13]                                                                                                     
|                                                                                                         
|[14]                                                                                                     

32



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##### 

|[15] | Incorporated   by reference to the Registrants Form 10-QSB for the quarter ended September   30, 2003.                                                      
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                              
|[16] | Incorporated   by reference to Amendment No. 1 to the Registrants Registration Statement on   Form S-3, filed December 4, 2003, Registration No. 333-110567.
|     |                                                                                                                                                              
|[17] | Incorporated   by reference to the Registrants Form 10-KSB/A for the year ended December   31, 2003.                                                        
|     |                                                                                                                                                              
|[18] | Incorporated   by reference to the Registrants Form 8-K dated March 29, 2004.                                                                               
|     |                                                                                                                                                              
|[19] | Incorporated   by reference to the Registrants Form 10-QSB for the quarter ended March 31,   2004.                                                          

33



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